Swedish retailer ICA Gruppen has entered into a cooperation agreement with Ocado and will use the company’s e-commerce platform and technology for its automated picking warehouses.
ICA said the agreement will create conditions to improve its customer offering and boost the efficiency of grocery e-commerce.
In the next four years ICA Sweden will invest around SEK 600 million ($68 million) in a fully automated e-commerce solution, including Ocado’s technology and e-commerce platform designed specifically for grocery products. In 2018 this investment will amount to approximately SEK 200 million ($22.7 million).
Ocado, which has been active in the UK retail market since 200, already has existing cooperation agreements with other grocery retail companies in the UK, Canada and France. In January, it signed a deal with Canadian retail chain Sobeys.
ICA Sweden will switch to Ocado’s e-commerce platform and will build a new e-commerce warehouse in the Stockholm area.
ICA Gruppen CEO Per Strömberg said: “We are now laying the foundation for the next generation e-commerce offering, and we are putting an important piece of the puzzle in place to realise our digital ambitions for all of ICA Gruppen. Today we have the industry’s most efficient processes for physical shopping, and through this agreement we can create the most efficient solutions also for e-commerce.”
During 2021 ICA Sweden will switch to Ocado’s e-commerce platform and will build a new, highly automated e-commerce warehouse in the Stockholm area, which is expected to be finished in 2022. The agreement provides exclusivity in Sweden and the Baltic countries, under the conditions that ICA meets certain growth targets.
Analysis: ‘The time is now ripe’
E-commerce is increasingly important in Swedish retail but, for a country that invented the concept of pre-portioned meal boxes, the dominant area until now has been in ‘meal bags’. Consumers choose between several options that keep them supplied for the working week, and provide enough ingredients and recipe cards for a couple or family of four.
ICA tested a form of conventional online retail in the early 2000s but told FoodBev that, at that time, there was a different retail landscape to the one that exists today. ICA launched its pre-selected grocery bags in 2011 and the platform it operates today for e-commerce, picking produce in store, dates back to 2015. In February, the Swedish company announced it would build a so-called ‘dark store’ – a term used to refer to facilities that fulfil solely online orders – which will act as a central solution for the company’s online business in the greater Stockholm region. ICA Sweden CEO Anders Svensson claimed that “e-commerce is now so large in Stockholm that the time is ripe to offer stores central picking and delivery”.
Ocado and ICA’s partnership comes in the context of Sainsbury’s multi-billion-pound merger with Walmart-owned Asda, which itself was partially motivated by the growth of e-commerce, as well as the two retailer’s sluggish sales. Walmart itself has taken grocery delivery into consumers’ homes, piloting a service in partnership with smart lock manufacturer August that allows consumers to have their groceries delivered – and put away for them as well.
ICA Sweden CEO Anders Svensson said: “Our cooperation with Ocado entails that they will adapt their world-leading e-commerce platform to ICA’s business model with independent retailers. At the same time, we will benefit from the fact that Ocado are continuously developing the platform for themselves and other leading grocery retailers around the world.
“An automated e-commerce warehouse will enable us to offer customers a wider product range online and better deliveries while at the same time streamlining ICA’s logistics flows.”
Luke Jensen, CEO of Ocado Solutions, added: “We are excited and proud to be partnering with another of Europe’s leading grocery retailers. ICA has a strong track record of growth and innovation and our Smart Platform will give the ICA retailers the opportunity to provide their customers with new levels of service, convenience and value. Our flexible, scalable, modular solution is uniquely positioned to meet a fresh set of challenges and allow ICA to deliver its ambitions for online.”
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